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PSG/PLD - PSG GROUP/PALADIN CAPITAL - Joint Detailed Cautionary
Announcement
PSG GROUP LIMITED
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
(REGISTRATION NUMBER 1970/008484/06)
SHARE CODE: PSG
ISIN CODE: ZAE000013017
("PSG")
PALADIN CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2007/032836/06)
Share code: PLD
ISIN: ZAE000138970
("PALADIN")
JOINT DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE UNBUNDLING
OF CURRO HOLDINGS LIMITED ("CURRO") TO PALADIN SHAREHOLDERS AND
THE CONDITIONAL INTENTION OF PSG TO MAKE AN OFFER TO ACQUIRE THE
ENTIRE ISSUED SHARE CAPITAL OF PALADIN BY WAY OF A SCHEME OF
ARRANGEMENT
1. INTRODUCTION
1.1 Shareholders are hereby advised that the Board of Paladin has
resolved to unbundle 125 007 040 shares in Curro which equates to
77.54% of the entire issued share capital of Curro ("Curro
Shares") to Paladin shareholders, in the ratio of 21.53126 Curro
Shares for every 100 Paladin ordinary shares held on the record
date ("the Curro Unbundling"), subject to irrevocable undertakings
supporting the below mentioned Scheme being received by Paladin
from at least 50% of shareholders eligible to vote at the Scheme,
, which condition PSG can waive.
1.2 Shareholders are further advised that PSG has submitted to
the Board of Paladin a conditional intention to make an offer to
acquire 100% of the issued ordinary shares in Paladin
("Conditional Intention"), which constitutes a total of 108 295
409 Paladin shares not already held by PSG through PSG Financial
Services Limited ("Scheme Shares"), for either the Share
Consideration of 4 PSG Shares for each 100 Scheme Shares disposed
of in terms of the Scheme or the Cash Consideration of 170 cents
for each Scheme Share disposed of ("the Scheme Consideration") in
terms of a Scheme of Arrangement ("the Scheme").
1.3 The Conditional Intention is subject to the condition
precedent that PSG Shareholders resolve to place sufficient shares
under the control of PSG directors in order to settle the Scheme
Consideration ("Pre-Condition to the Scheme"). Upon the fulfilment
of the Pre-Condition to the Scheme the Conditional Intention to
make an offer, as set out in this announcement, will become a firm
intention to make an offer. Shareholders will be advised as soon
as the aforementioned condition precedent has been fulfilled.
2. RATIONALE
2.1 The initial rationale to list Paladin as a separate
investment vehicle, included an opportunity to give investors
direct exposure to private equity deal flow at PSG and to use
Paladin script to facilitate transactions, for these reasons and
PSG`s ability to manage same effectively, PSG would receive
management and performance fees. Since listing there hasn`t been a
material change in share ownership at Paladin.
2.2 At the last practical date PSG owned 81.3% of Paladin and
PSG`s directors and management owned an additional 5.6%, which
does not justify a separate listing as Paladin is in effect paying
PSG and its management to manage a company which they (including
associates) own 87% of and, in addition, Paladin does not envisage
any new issues to third parties over the short to medium term.
2.3 The rationale for Paladin minorities to vote in favour
of the Scheme includes:
2.3.1 Curro will be unbundled, Paladin shareholders will
therefore obtain a direct interest in Curro;
2.3.2 in respect of the balance of assets remaining following
the Curro unbundling, Paladin shareholders will receive a 30%
premium if they elect the share for share offer and a 17% premium
if they elect the cash offer on the estimated Paladin 30 day VWAP,
as at 1 July 2011, trading level following the unbundling; and
2.3.3 Paladin shareholders will also start receiving dividends
as Paladin was a non-dividend paying company.
2.4 Paladin shareholders should also not that Paladin shares were
increased by way of a rights offer at R1.17 per share immediately
after it listed on the JSE and today Paladin trades at
approximately R2.70 per share, two years later. Shareholder wealth
has therefore been created and Paladin shareholders could
potentially share in further long term wealth creation by
accepting the PSG Group shares and holding onto their Curro
shares.
3. THE SCHEME
3.1 Subject to the fulfilment of the Pre-Condition to the Scheme,
the terms of the Scheme will be as set out below.
3.2 PSG is proposing to acquire the Scheme Shares by way of a
scheme of arrangement between Paladin and its shareholders
("Scheme Members") in terms of section 114(1)(c) of the Companies
Act, No 71 of 2008, as amended, as may be applicable.
3.3 In terms of the Scheme, PSG will acquire the Scheme Shares
from the Scheme Members registered as such on the record date
determined by the Board of Paladin, being the date on which
Paladin shareholders must be recorded in the share register of
Paladin in order to participate in the Scheme and received the
Scheme Consideration.
3.4 PSG has nominated its wholly owned subsidiary PSG Financial
Services Limited to take delivery of all Scheme Shares acquired
from Scheme Members pursuant to the Scheme.
3.5 As consideration for the disposal of their Scheme Shares,
Scheme Members will become entitled to receive either the Share
Consideration of 4 PSG Shares for each 100 Scheme Shares disposed
of in terms of the Scheme or the Cash Consideration of 170 cents
for each Scheme Share disposed of in terms of the Scheme.
3.6 As at 1 July 2011, being the date the Paladin Board resolved
to proceed with the Curro Unbundling and the Scheme, the VWAP of
Paladin`s shares on the JSE for the 30 days up to and including 1
July 2011, was 275 cents per share.
3.6.1 The closing price of Curro on the JSE on 1 July 2011 was
600 cents per share and therefore it is assumed that the Curro
Unbundling will reduce the trading price of Paladin shares by
approximately 130 cents per Paladin share.
3.6.2 Paladin estimates that the trading price of Paladin
shares post the Curro Unbundling will be approximately 145
cents
per share ("Estimated Trading Price").
3.6.3 The Share Consideration effectively places a value of
189 cents on each Scheme Share disposed of in terms of the
Scheme,
using the VWAP of PSG Shares on the JSE for the 30 days up to
and
including 1 July 2011 of R47.26 per share.
3.6.4 Therefore the Share Consideration represents a premium
of 30% to the Estimated Trading Price.
3.6.5 The Cash Consideration therefore represents a premium of
17% to the Estimated Trading Price.
3.7 PSG Collective Investments Limited (registration number
1997/016475/06) has provided an irrevocable confirmation to the
Takeover Panel that sufficient cash resources are available to
satisfy the Cash Consideration in terms of the Scheme.
4. CONDITIONS PRECEDENT OF THE SCHEME
4.1 The Scheme will be subject to the fulfilment, or waiver (in
whole or in part) by PSG, of the following conditions by no later
than 30 November 2011:
4.1.1 the approval of the Scheme by the requisite majority of
Shareholders as contemplated in section 115(2)(a) of the
Companies
Act, and: (a) to the extent required, the approval of the
implementation of such resolution by a Court in terms of
section
115(2) and/or section 115(3) of the Companies Act; and (b) if
applicable, Paladin not treating the aforesaid resolution as a
nullity, as contemplated in section 115(5)(b) of the Companies
Act;
4.1.2 the receipt of unconditional approvals, consents or
waivers from all regulatory bodies, necessary to implement the
Scheme, to the extent required, including, but not limited to,
the
Takeover Regulation Panel ("Takeover Panel") (in terms of a
compliance certificate to be issued in terms of the Companies
Act
in relation to the Scheme) and the JSE, to the extent that any
such approvals, consents or waivers are subject to conditions,
such conditions being satisfactory to PSG; and
4.1.3 a fair and reasonable opinion being obtained by the
independent Paladin board committee.
4.1 Paladin and PSG will use their reasonable endeavours to
procure the fulfilment of each of the Conditions Precedent as soon
as reasonably practicable.
4.2 The Conditions Precedent in paragraphs 4.1.1, 4.1.2 and 4.1.3
are not capable of being waived.
4.3 Should all the Conditions Precedent not have been fulfilled
or waived, as the case may be, on or before 30 November 2011 or by
such later date as may be agreed upon between Paladin and PSG in
writing, subject to the approval by the Takeover Panel (if
necessary), the Scheme shall not become operative and shall be of
no force or effect.
4.4 An announcement will be published on SENS and in the South
African press as soon as practicable after all the Conditions
Precedent have been fulfilled or waived, as the case may be or if
the Scheme lapses pursuant to the provisions of paragraph 4.4.
5. PRO FORMA FINANCIAL EFFECTS OF THE CURRO UNBUNDLING AND
SCHEME FOR PSG
The table below summarises the unaudited pro forma financial
effects of the Curro Unbundling and Scheme of Arrangement on
PSG shareholders based on the audited results of PSG for the
year ended 28 February 2011.
The unaudited pro forma financial effects are the
responsibility of the PSG directors and have been prepared
for illustrative purposes only to provide information about
how the Curro Unbundling and Scheme of Arrangement may have
affected the financial position of the PSG shareholders on
the relevant reporting date. Due to its nature, the unaudited
pro forma financial effects may not be a fair reflection of
PSG`s financial position after the implementation of the
Curro Unbundling and Scheme of Arrangement or of PSG`s future
earnings.
Audited Unaudited Unaudited Total
financial pro forma pro forma change
results at results results (%)
28 February after after
2011 before Curro Curro
Curro Unbundling Unbundling
Unbundling (cents) and Scheme
and Scheme (cents)
(cents)
Basic earnings 424.1 424.1 449.2 5.9%
per share
Diluted basic 420.2 420.2 445.3 6.0%
earnings per
share
Headline 306.7 306.7 317.4 3.5%
earnings per
share
Diluted 303.9 303.9 314.6 3.5%
headline
earnings per
share
Recurring 241.9 241.9 242.0 -
headline
earnings per
share
Net asset value 2 156.1 2 156.1 2 244.5 4.1%
per share
Net tangible 1 539.5 1 539.5 1 643.5 6.8%
asset value per
share
Weighted 167.1 167.1 171.5 2.6%
average number
of shares in
issue (million)
Diluted 168.6 168.6 173.0 2.6%
weighted number
of shares in
issue (million)
Number of 166.3 166.3 170.6 2.6%
shares in issue
(million)
Notes and assumptions:
1. The basic earnings per share, diluted basic earnings per
share, headline earnings per share, diluted headline earnings per
share and recurring headline earnings per share figures have been
calculated on the basis that the Curro Unbundling and the Scheme
were effected on 1 March 2010.
2. The net asset value per share and net tangible asset value
per share figures have been calculated on the basis that the Curro
Unbundling and the Scheme were affected on 28 February 2011.
3. A taxation rate of 28% is assumed.
4. The basic earnings per share, diluted basic earnings per
share, headline earnings per share, diluted headline earnings per
share and recurring headline earnings per share have been
calculated based on the weighted average number of shares in issue
for the year ended 28 February 2011.
5. The net asset value per share and net tangible asset value
per share figures have been calculated based on the number of
shares in issue at 28 February 2011.
6. Ratio of 21.53126 Curro shares per 100 Paladin shares is
assumed for the Curro Unbundling.
7. Assumed that PSG will issue additional shares pursuant to the
Scheme based on an expected 100% take-up of the Share
Consideration.
6. OPINIONS AND RECOMMENDATIONS
An independent Paladin board committee has been appointed by
the Board of Paladin. The independent Paladin board committee
has appointed Questco Sponsors (Proprietary) Limited as an
independent adviser acceptable to the Takeover Panel to
provide the Board of Paladin with external advice in regard
to the Scheme and to make appropriate recommendations to the
Board of Paladin for the benefit of Scheme Members. The
substance of the external advice and the views of the
independent Paladin board committee will be detailed in the
circular that will be posted to Paladin shareholders.
7. DE-LISTING OF PALADIN FROM THE JSE
Following the implementation of the Scheme, an application
will be made by Paladin for the termination of the listing of
its issued share capital on the JSE.
8. EXISTING HOLDING OF SHARES IN PALADIN
As of the date of this announcement, PSG owned 81.3% of the
issued share capital in Paladin and PSG`s directors and
management owned 5.6% of the issued share capital in Paladin.
9. FURTHER DOCUMENTATION AND SALIENT DATES
Further details of the Scheme will be included in a circular
to Paladin shareholders, containing, inter alia, a notice of
the Scheme meeting, a form of proxy and a form of surrender
and transfer, which will, subject to the approval of all
regulatory authorities, be posted to Paladin shareholders in
due course.
The salient dates in relation to the Scheme will be published
when the Pre-Condition to the Scheme is fulfilled, prior to
the issuing of the aforementioned documentation.
10. CAUTIONARY ANNOUNCEMENT
Paladin shareholders are referred to the cautionary
announcement dated 15 June 2011 and are advised to continue
exercising caution when dealing in Paladin shares until such
time as the Pre-Condition to the Scheme is fulfilled and this
cautionary is withdrawn.
PSG shareholders are advised to exercise caution when dealing
in PSG shares until such time as the Pre-Condition to the
Scheme is fulfilled and this cautionary is withdrawn.
11. PALADIN INDEPENDENT BOARD RESPONSIBILITY STATEMENT
The Independent Board of Paladin accepts responsibility for
the information contained in this announcement which relates
to Paladin and confirms that, to the best of its knowledge
and belief, such information which relates to Paladin is true
and the announcement does not omit anything likely to affect
the importance of such information.
12. PSG RESPONSIBILITY STATEMENT
PSG accepts responsibility for the information contained in
this announcement which relates to PSG and confirms that, to
the best of its knowledge and belief, such information which
relates to PSG is true and the announcement does not omit
anything likely to affect the importance of such information.
Stellenbosch
13 July 2011
Corporate adviser to Paladin and Sponsor to PSG: PSG Capital
(Proprietary) Limited
Designated adviser and independent adviser to Paladin:
Questco Sponsors (Proprietary) Limited
Date: 13/07/2011 13:23:11 Supplied by www.sharenet.co.za
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